Rental yield tells you how much annual income a property generates relative to what you paid for it. It's the single most useful number for comparing two investment properties, because it strips price differences down to a percentage you can compare directly.
Gross rental yield
This is the simplest version, and the one most listings quote:
Say you buy a condo for RM600,000 and rent it out for RM2,200 a month. Annual rent is RM26,400, so:
Net rental yield
Gross yield ignores the costs of actually owning and renting out the unit. Net yield subtracts them, and gives a more honest picture:
- Assessment tax (cukai pintu) — typically around 4-6% of a property's annual rental value, paid to the local council
- Quit rent (cukai tanah) — usually a small fixed annual amount
- Maintenance and sinking fund — for condos/apartments, often RM0.25-RM0.45 per sq ft per month
- Fire insurance — a modest annual premium
- Agent commission — usually one month's rent per year of tenancy, amortised
- Vacancy allowance — a realistic buffer for the weeks between tenants
Using the same RM600,000 / RM2,200-a-month example, with roughly RM4,800 a year in combined costs:
What counts as a "good" yield in Malaysia
There's no single right answer — it depends heavily on the area and property type:
| Area type | Typical gross yield |
|---|---|
| Prime KLCC / city-centre high-rises | 3.5% – 4.5% |
| Suburban condos near transit (PJ, Bukit Jalil) | 4.5% – 5.5% |
| Emerging townships (Kwasa Damansara, Subang) | 5% – 6%+ |
| Landed / low-density luxury | 2.5% – 3.5% |
Generally, more established, high-demand areas trade a lower yield for stronger long-term capital appreciation, while newer townships offer a higher yield to compensate for the wait until the area matures.
Common questions
What's a good rental yield in Malaysia?
Anywhere from 4% to 6% gross is generally considered healthy for Malaysian residential property, though prime central locations often run lower (3-4%) in exchange for stronger capital appreciation.
Does rental yield include capital appreciation?
No. Rental yield only measures income return from rent. Capital appreciation (the property's value going up over time) is a separate metric — together they make up your total return.
Should I use gross or net yield to compare properties?
Net yield is more accurate since it accounts for real holding costs, but gross yield is faster to calculate and fine for an initial comparison, as long as you're consistent and use gross yield for every property you compare.